KARACHI: The value added sector, represented by the Pakistan Hosiery Manufacturers and Exporters Association (PHMA), has reached out to Finance Minister Asad Umar, urging the government to grant tax credit for equity investment to business individuals and Associations of Persons (AOPs).
In a letter sent to the Finance Minister, PHMA highlighted the need for equity investment tax credit equality, citing previous amendments in the Income Tax Ordinance 2001.
The initial amendment was introduced in the Income Tax Ordinance 2001 through the Finance Act of 2010 under Section 65B. This amendment aimed to encourage companies to invest in balancing, modernizing, and replacing the existing plant and machinery within industrial undertakings in Pakistan. It provided a 10 percent rebate in income tax payable for the tax year in which the said plant and machinery was installed. The incentive was applicable to investments made between July 1, 2010, and June 30, 2015.
Subsequently, in the Finance Act of 2018, the tax credit under Section 65B had its cutoff date extended to June 30, 2021.
Muhammad Jawed Bilwani, Central Chairman of PHMA and Chairman of the Pakistan Apparel Forum, emphasized that, according to the Constitution of the Islamic Republic of Pakistan’s Article 18, which guarantees “Freedom of Trade, Business, or Profession,” every citizen has the right to engage in lawful trade or business. Bilwani further highlighted that under Pakistan’s existing laws, businesspersons can engage in legal business activities by registering as Proprietor/Business Individuals, forming Associations of Persons (AOPs) under the Partnership Act 1932 and Limited Liability Partnership Act 2017, or establishing companies under the Companies Act 2017 (formerly the Companies Ordinance 1984) with the Securities and Exchange Commission of Pakistan (SECP).
There are no legal restrictions for Pakistani citizens to participate in businesses under any specific law, and discrimination should be avoided in such cases, Bilwani noted.
The PHMA urged the Finance Minister to amend the Income Tax Ordinance 2001, Section 65B, to include “Proprietorship/Business Individuals” as well as “Associations of Persons (AOPs)” on par with “Companies.” This move would provide an equal playing field for all entities to benefit from tax credits for equity investment.
The request for tax credit equality aims to promote investment and economic growth across different forms of business organizations in Pakistan, ensuring that all entities receive similar benefits when contributing to the country’s economic development.
